berniecmps
01-08-2008, 01:20 AM
With growing frequency in preforeclosure short sale scenarios, its simply not enough to present a compelling, full market value, cash, as-is purchase offer to a foreclosing lender in hopes it will release its security interest and accept less than is due.
Sometimes a properly constructed, well supported, and timely short sale proposal is rejected, even though a short sale appears to be in all parties’ best financial interest. Why? There are other, untold forces at play.
Criteria imposed by the Investors (owners of the mortgage debt) which employ the loan servicers who are responsible for collection activities including preforeclosure short sale workouts and forced foreclosure sales have specific business objectives which may not appear to make short term financial sense to us.
Internal investment criteria used to consider short sale workouts include, but are not limited to derivative relationships and their impact on earnings, taxation, and position in the marketplace.
Loan Servicer: “We have considered your request for short sale. The Investor says we can only accept the full amount due.”
ME: “But the fair market value is much less than what is owed. This is a great offer! You’ll never net this much if this property is sold at Trustee’s Sale!”
Loan Servicer: “That may be, but we can only accept payment in full.”
ME: “But you stated you would consider a short sale as an alternative to foreclosure.”
Loan Servicer: “Yes, that’s true. We will consider a short sale.”
ME: “I have complied with all the criteria listed in your application. A fair market value, listing agreement, MLS activity history, a contingency free Contract of Sale, a Preliminary HUD1, Full financial disclosures, a letter of hardship, Everything!!!! I’ve done a BPO and confirmed the asking price is above market value.”
Loan Servicer:”Yes. Thank you for all your hard work. I can only accept the full amount due.”
Even though your transaction may fail, you can be sure your presentation (market data, borrowers’ hardship, etc.) will be used by the loan servicer when it seeks to justify losses sustained by its clients.
This was an actually situation I encountered with Countrywide. Owed on the property was 617,000, we submitted an offer of 595,000, and it was rejected.http://www.wannanetwork.com/discussion/images/smilies/mad.gif
Sometimes a properly constructed, well supported, and timely short sale proposal is rejected, even though a short sale appears to be in all parties’ best financial interest. Why? There are other, untold forces at play.
Criteria imposed by the Investors (owners of the mortgage debt) which employ the loan servicers who are responsible for collection activities including preforeclosure short sale workouts and forced foreclosure sales have specific business objectives which may not appear to make short term financial sense to us.
Internal investment criteria used to consider short sale workouts include, but are not limited to derivative relationships and their impact on earnings, taxation, and position in the marketplace.
Loan Servicer: “We have considered your request for short sale. The Investor says we can only accept the full amount due.”
ME: “But the fair market value is much less than what is owed. This is a great offer! You’ll never net this much if this property is sold at Trustee’s Sale!”
Loan Servicer: “That may be, but we can only accept payment in full.”
ME: “But you stated you would consider a short sale as an alternative to foreclosure.”
Loan Servicer: “Yes, that’s true. We will consider a short sale.”
ME: “I have complied with all the criteria listed in your application. A fair market value, listing agreement, MLS activity history, a contingency free Contract of Sale, a Preliminary HUD1, Full financial disclosures, a letter of hardship, Everything!!!! I’ve done a BPO and confirmed the asking price is above market value.”
Loan Servicer:”Yes. Thank you for all your hard work. I can only accept the full amount due.”
Even though your transaction may fail, you can be sure your presentation (market data, borrowers’ hardship, etc.) will be used by the loan servicer when it seeks to justify losses sustained by its clients.
This was an actually situation I encountered with Countrywide. Owed on the property was 617,000, we submitted an offer of 595,000, and it was rejected.http://www.wannanetwork.com/discussion/images/smilies/mad.gif